How to collect money from a client who won't pay

How to collect money from clients who won't pay? It’s a question that therapists sometimes ask themselves. People often forget that psychotherapy is a business. Yes, therapists are usually empathetic people who are genuinely interested in helping others. However, they are also trying to make enough money to support themselves and their families. The problem is that therapists tend to be compassionate people who want to avoid conflict, and collecting payment from clients requires a firm and unyielding hand. So, what can a therapist do when they are having trouble collecting their well-deserved fees?

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The following are suggestions to prevent non-payments from ever occurring.

Discuss your payment policy in the intake session

It is recommended that therapists talk about the payment policy during the intake session. Topics may include the cost per session, how insurance works, and late cancellations/no-shows. Setting firm limits with your payment policy will prevent a myriad of problems later. Also, it is important to discuss how a lack of payment can become a clinical issue. Jason Linder, MA, LMFT, a therapist in California, notes how payment issues can affect the therapeutic relationship in the Psychotherapy Networker.

Include the payment policy on the informed consent form

Not only do you need to verbally review your payment policy with clients, but you also need to have it as part of your informed consent forms. That way, you have in writing that the client has understood and agreed to the payment policy. This is incredibly useful if the client later claims that they never knew about the policy. There are numerous examples on the internet of clinicians’ informed consent forms. Here is one consent form from a group private practice that does a good job describing their payment policy.

Collect payment at the beginning of the session

One of the simplest ways of preventing late fees is to collect the payment before you begin the session. This is easier if you have an administrative staff or receptionist. They can collect it before they ever see you. If you don’t, you will have to be firm with the client and ask for it yourself. However, if you are strict about payment at the beginning, the client will learn to do it automatically without you even asking. If you wait until the end of the session or send out a bill later, you have lost your leverage; the client has already received the service so they will be less likely to pay for it.

Keep a credit card on file

Increasingly, therapists are having the client provide a credit card at intake to keep on file for their payment. This has the advantage of limiting the need for the transaction of money. It also gives the therapist the security of knowing that they have access to a payment source and won’t have to address how to collect money from clients who won’t pay. Of course, not everyone may have a credit card or they may bristle at the thought of giving it to their therapist. But it is worth asking. It is by far the easiest way to collect fees. You can also book at the time of scheduling which is an incentive for the client to attend the appointment.

Set up online payment

You want to make it as convenient as possible for people to pay for their sessions. Online payment makes it possible for clients to pay whenever they think about it, rather than just when they are in an appointment. Besides, many people receive therapy virtually, so they need a way to pay remotely. There are numerous online or electronic payment options (e.g., PayPal, Venmo, etc.) but many are not HIPAA-compliant. High-quality practice management software has HIPAA-compliant payment processing as part of its package. For instance, TheraPlatform allows payment through Stripe. Other HIPAA-compliant payment software includes Square and Ivy Pay.

How to collect money from clients who won't pay

Despite your best efforts, sometimes a client doesn’t pay their bill on time. Here are some ideas on how to collect money from clients who won’t pay.

Have a discussion

The first thing you need to do is talk to your client about the late payment. It may be uncomfortable but it will yield the best results. Only by talking about it can you find out why they are delaying payment. It could be an honest mistake or a temporary inability to pay that you can work out to everyone’s benefit.

Reminder letters

Sending a reminder letter (or two or three) serves multiple purposes: First, it lets the client know that they owe money. That may not always be helpful but some people legitimately forget. It also is a way for the therapist to document that they attempted to retrieve the money owed to them. This can become important later if the therapist must resort to less friendly measures to obtain payment.

Be flexible

Sometimes, a client can’t pay right away for a variety of reasons. It is best to be flexible. For example, create a payment plan or find a creative way for them to settle their bill.

Remember, it is better to obtain your money late than not at all.

What if a client refuses to pay?

You can resort to the following options if you have tried all others.

Court and collection agencies

If you have attempted to retrieve your money through all other means, you might want to turn to a small claims court or a collection agency. However, you need to think long and hard about whether you want to pursue these routes. There are major downsides. First, it is going to cost a lot of time and money. Lawyers aren’t cheap and collection agencies take a sizable cut of all the money they recover. Plus, your clients aren’t going to be happy you have decided to come after them. As a result, they can write bad reviews on social media, countersue, and even report you to your licensing board with a real or imagined complaint. Unless you are owed a huge sum, it may not be worth the aggravation when considering how to collect money from clients who won’t pay.

Termination

It is perfectly ethical to terminate therapy if you are not getting paid. However, you need to take steps to ensure that you aren’t abandoning your client. You need to give the client adequate notice, provide them with a list of other available therapists in the area, and, ideally, give them some choice of therapists that may have a sliding scale.

Psychotherapists are generally kind people but they still want to be paid for their work. Although clients generally pay on time, therapists can take several steps to ensure they receive their well-deserved compensation.